Facebook sets IPO share price at $28-$35

Investors hungry for details on Facebook's hotly anticipated IPO got a tasty morsel Thursday when the company set the price for what will be one of the largest U.S. deals ever.

The social-networking company plans to sell shares for $28 to $35 each, using the ticker symbol FB. That will raise roughly $10.6 billion, making it the fifth-largest initial public offering U.S. IPO, says Renaissance Capital.

The price also values Facebook at about $86 billion, making it the most valuable U.S. company to ever go public, Renaissance says. "Many people want to own this unique company, and it has the momentum," says Renaissance's Kathy Smith.

As massive as the IPO is, its wide range and lower-than-expected sale price also surprised some analysts. Based on recent purchases of Facebook's shares on private exchanges, some estimates for the company's total value had hit $100 billion and higher.

"I'm surprised they took it down," says Josef Schuster of IPO tracking firm IPOX Schuster. Large institutions likely looked for a lower price because of the massive size of the offering, he says.
Additionally, Facebook's recent first-quarter results also were a bit of a disappointment because of the decelerating growth rate in the numbers, says Francis Gaskins of IPOdesktop.com. "Their March quarter numbers weren't good," he says.

Facebook's revenue grew 45% in the first quarter to $1.1 billion, which was well below the 88% revenue growth during the full year of 2011. Profit fell 12% in the first quarter.
Facebook also provided details showing just how much the selling shareholders would haul in from the IPO, expected in May. Founder Mark Zuckerberg is planning to sell 71.1 million shares, or nearly 7% of his holdings, Gaskins says. The stock being sold would be worth $2.2 billion, based on the midpoint of the proposed range.

While investors normally don't like to see insiders selling, the levels of selling aren't a concern, Schuster says.
Facebook would have a P-E of about 80 times its 2011 earnings. Its valuation is 19 times its revenue, which is close to the 21 times revenue valuation of its faster-growing competitor LinkedIn.